Mining majors BHP Billiton and Rio Tinto have warned that the Australian mining industry will witness more mine closures and job losses this year due to the combination of high costs, high taxes and strong currency.
BHP Billiton global coal president Dean Dalla Valle was quoted by The Sydney Morning Herald as saying that the industry would face tough times ahead in a period of over-supply, given that many operators are not making money at the current depressed prices.
“You are going to see more exits from the market,” said Valle, who had announced earlier this month that the company is mothballing its underground and open cut coal operations in Hunter Valley, citing unsustainable financial losses due to the existing market conditions.
“The big established and high-quality resource bases where there are efficient and effective operations will have to continue this relentless cost drive.”
Rio Tinto Energy chief executive Harry Keynon-Slaney admitted that the company has shifted its focus on cost-cutting in the industry and is ‘prepared to kill sacred cows,’ like freezing salary increases.
“The big established and high-quality resource bases where there are efficient and effective operations will have to continue this relentless cost drive; they will probably survive,” Slaney said.
“There are going to be some operations that are challenged.”
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